Correlation Between Pettenati and Lupatech

Can any of the company-specific risk be diversified away by investing in both Pettenati and Lupatech at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pettenati and Lupatech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pettenati SA Industria and Lupatech SA, you can compare the effects of market volatilities on Pettenati and Lupatech and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Pettenati with a short position of Lupatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pettenati and Lupatech.

Diversification Opportunities for Pettenati and Lupatech

0.61

Correlation Coefficient

Pettenati  Lupatech

Poor diversification

The 3 months correlation between Pettenati and Lupatech is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pettenati SA Industria and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech SA and Pettenati is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Pettenati SA Industria are associated (or correlated) with Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of Pettenati i.e., Pettenati and Lupatech go up and down completely randomly.

Pair Corralation between Pettenati and Lupatech

Assuming the 90 days trading horizon Pettenati SA Industria is expected to generate 0.82 times more return on investment than Lupatech. However, Pettenati SA Industria is 1.22 times less risky than Lupatech. It trades about 0.02 of its potential returns per unit of risk. Lupatech SA is currently generating about -0.55 per unit of risk. If you would invest  765.00  in Pettenati SA Industria on February 2, 2024 and sell it today you would earn a total of  4.00  from holding Pettenati SA Industria or generate 0.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Pettenati SA Industria  vs.  Lupatech SA

Pettenati SA Industria

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pettenati SA Industria has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pettenati is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Lupatech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lupatech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Pettenati and Lupatech

The main advantage of trading using opposite Pettenati and Lupatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pettenati position performs unexpectedly, Lupatech can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lupatech will offset losses from the drop in Lupatech's long position.

The idea behind Pettenati SA Industria and Lupatech SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.